(Test Bank) Parkin's Macroeconomics

Armstrong,Moore,Rush, 3

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3rd Edition

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Test Bank for Parkin's Macroeconomics, The downloadable file consists of 610 pages, and the total size of the file is 7.04 MB. Purchase now only for highly discounted price.

Author(s): Armstrong, Moore, Rush

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TESTITEMFILE3 CHAPTER S1 0–15 for Pear son Addison- Wesley Boston SanFrancisco New Yo rk London Toronto Syd ney To kyo Singa poreMadrid MexicoCity MunichParisCape To wn Hong Kong Mont realThisworkis protectedbyUScopyrightlaws andisforinstructors’useonly.LukeArmstrong LeeColleg eBarbaraMoore UniversityofCentralFloridaMarkRush UniversityofFloridaMacro_TIF3_PARKIN_1394576_TTL.qxd:Layout 1 3/25/11 5:15 PM Page 1© 2012 Pearson Education, Inc. Pu blishing as Addison Wesley  Introduction This book is one of six test banks, each carefully crafted to be part of the most comp lete package of test banks ever offered to support a beginning economics text-book. Three of the test banks are designed to accompa-ny Michael Parkin’s Microeconomics , Tenth Edition and three accompany Michael Parkin’s Macroeconomics , Tenth Edition. The complete set of six books compris- es Microeconomics Test Item File , Volumes I, II, and III and Macroeconomics Test Item File , Volumes I, II, and III. Volume 1 of the Microeconomics Test Item File con- tains questions from Chapters 1 through 7; volume 2 contains questions from Chapters 8 through 13; and volume 3 contains questions from Chapters 14 through 20. Volume 1 of the Macroeconomics Test Item File contains questions from Chapters 1 through 5; volume 2 contains questions from Chapters 6 through 9; and volume 3 contains questions from Chapters 10 through 15.  Test Bank Principles Three principles guided the writing and revising of the questions:  The questions should be “fail-safe” insofar as the topic of the questions has been explained in the textbook.  A question should not be a guessing game forcing the students to puzzle out what the question asks.  An instructor must be absolutely secure in the knowledge that each question contains material covered in the textbook. I endeavored to insure that all questions meet all the criteria so that they are, as Donald Dutkowsky put it, “bullet proof.”  Tenth Edition Revisions We have made significant revisions in preparing the test banks for the Tenth Edition:  All the questions have been reviewed to ensure consistency with the text as well as clarity for the students. Questions dealing with material elimi-nated from the ninth edition of the textbook were deleted and some duplicative questions were elim-inated. New questions were added to cover both the new as well as the old topics in the tenth edi-tion.  A large number of the questions have been re- worded to enhance clarity. The AACSB standards were checked for accuracy and, if necessary, changed.  The artwork was reviewed and changed to remain consistent with the tenth edition of the textbook.  To the greatest extent possible, the questions have been ordered so that they follow the order the ma-terial is presented in the corresponding textbook chapter. If you assign only part of a chapter to the students, it will be easy to select questions from that specific part.  Though not strictly a new revision, it remains worthwhile to note that the test banks are available in a user-friendly computerized test bank.  Multiple Choice Questions Taken together, there are nearly 15,000 multiple choice in the test banks. These questions have been written by many contributors. I have edited the ques-tions to ensure that each conformed with the writing style established in the book because this style has been Preface IV PREFACE © 2012 Pearson Education, Inc. Pu blishing as Addison Wesley carefully crafted for maximum student comprehension. I also arranged the questions so that they are in the same order that the topics are presented within the textbook. Among questions de aling with a similar top- ic, the questions are ordered with non-numerical ques-tions first, questions deal ing with a numerical table second, and questions dealing with a figure third. In addition to questions drawn directly from the text, there also are multiple choice questions that are either the same as or else closely related to the questions in the Study Guide and on the MyEconLab student website for the book. Each of these questions is identified as to its source. If you have assigned these student supple-ments to your class, you have the means to “reward” students who are using them by asking questions draw-ing on what they have been studying. Each chapter has “News Based Questions.” These ques- tions feature a brief news clip or a sentence with some news or facts and then question(s) based on that infor-mation. These are practical questions that stress apply-ing the economics the students are learning to events taking place in the world around them. The questions in each section of the chapter are based on the material covered only in that section. However we have also included “Part Review” multiple choice questions. These sections feature questions that are drawn from material covered in more than one chapter in each Part. You can use th ese questions if you want more integrative questions that lead students to think about broader issues.  Other Styles of Questions In addition to multiple choice questions, each chapter also features essay question s, numeric questions, graph- ing questions, true or fals e questions, and extended problems. Within each chapter, you will find each type of question grouped together—that is, the essay ques-tions for each chapter are first, followed by the numer-ic/graphing questions for each chapter, and so on. In this fashion, if you want to write a strictly essay ques- tion exam, it will be easy to do so. Of course, within each chapter, the questions are arranged in the same order that the topics appear in the textbook. For each chapter there are 3 to 5 extended problems. These questions are, as the name implies, longer ques-tions. Sometimes the questions for a chapter build upon each other; other times the questions are inde-pendent. These questions can be used on exam. How- ever, they may also be given to the students and used as homework. I think the best way to view these questions is as a valuable supplemen t to the outstanding ques- tions already in the textbook.  Final Comments I have been teaching principles classes for over two decades, have written hundreds of exams, and won several teaching awards. Nonetheless, I was stunned by the quality of the questions in the test banks. I lost count of the number of times that I marveled at a ques-tion and wished that I had thought of it. While creat- ing this test bank took significantly more effort than preparing an ordinary test bank, I am sure that the quality you will find made the task worthwhile. Just as Sir Isaac Newton stood on the shoulders of the giants who came before him, so, too do these test banks reflect the superb work of the authors who initially wrote and compiled them. It is entirely fitting to thank them:  Peter von Allmen of Moravian College  Sue Bartlett of the University of South Florida  Kevin Carey of American University  Leo Chan of the University of Kansas  Donald H. Dutkowsky of Syracuse University  Andrew Foshee of McNeese State University  James Giordano of Villanova University  John Graham of Rutgers University  Jill Boylston Herndon of the University of Florida  Veronica Z. Kalich of Baldwin-Wallace College  Sang Lee of Southeastern Louisiana University  William Mosher of Clark University  Melinda Nish of Salt Lake Community College  Terry Olson of Truman State University  Ed Price of Oklahoma State University  Jeff Reynolds of Northern Illinois University  Rochelle L. Ruffer of Youngstown State University  Virginia Shingleton of Valparaiso University  Della Sue of Marist College  Robert Whaples of Wake Forest University  Peter A. Zaleski of Villanova University  Carol Dole, of Jacksonville University  Constantin Oglobin of Georgia Southern University PREFACE V © 2012 Pearson Education, Inc. Pu blishing as Addison Wesley  Nora Underwood of the University of California, Davis Contributing questions for the Tenth edition are:  Luke Armstrong of Lee College  Gary Hoover of the University of Alabama  Svitlana Maksymenko of the University of Pittsburgh  Barbara Moore of the University of Central Florida  James K. Self of the University of Indiana, Bloomington Working with Luke, Gary, Svitlana, Barbara, and Jim was quite enjoyable. The questions they contributed were often innovative and remarkable! I have tried to make these Test Item Files as helpful and useful as possible. Undoubtedly I have made some mis- takes; mistakes that you may see. I have a standing offer in the Study Guide asking students who find any errors to notify me and promising that I will acknowledge them in all future editions of the Study Guide . I will make the same offer here: If you find any errors or have any comments or questions, please let me know and, if you want, I will note your help in all future editions of the test banks. And so keeping this promise:  Dr. B. N. Ghosh of Eastern Mediterranean Uni- versity in North Cyprus. Dr. Ghosh found several errors and I greatly appreciate his efforts! My address is below, or you can reach me via E-mail at MARK.RUSH@CBA.UFL.EDU. M a r k R u s h Economics Department University of Florida Gainesville, Florida 32611 January 2011 Contents Chapter 10  Aggregate  Supply and Aggregate  Demand  .................................................................  1  Chapter 11  Expenditure  Multipliers:  The Keynesian  Model ......................................................  131  Chapter 12  U.S. Inflation,  Unemployment,  and Business  Cycle ................................................  263  Chapter 13  Fiscal Policy ..................................................................................................................  386  Chapter 14  Monetary  Policy ...........................................................................................................  458  Chapter 15  International  Trade Policy ..........................................................................................  524  Part 1 Review  ............................................................................................................................... ......... 576  Part 2 Review  ............................................................................................................................... ......... 583  Part 3 Review  ............................................................................................................................... ......... 586  Part 4 Review  ............................................................................................................................... ......... 591  Part 5 Review  ............................................................................................................................... ......... 597  Chapter 10 Aggregate  Supply and Aggregate  Demand 1  Aggregate  Supply 1) The supply of real GDP is a function of A) the total expenditures  of consumers,  investors  and government. B) the sum of wages, salaries, corporate  profits, rents and interest. C) only the state of technology. D) the quantities  of labor, capital and the state of technology. Answer: D Topic: Aggregate Supply Fundamentals Skill: Conceptual Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking 2) The quantity of real GDP supplied  depends  on the A) level of aggregate  demand. B) quantity  of capital, bonds, and stocks. C) quantity  of labor, the quantity of capital, and the state of technology. D) price level, the unemployment  rate, and the quantity of government  expenditures  on goods and services. Answer: C Topic: Aggregate Supply Fundamentals Skill: Recognition Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking 3) An aggregate  supply curve depicts the relationship  between A) the price level and nominal GDP. B) household  expenditures  and household  income. C) the price level and the aggregate  quantity supplied. D) the price level and the aggregate  quantity demanded. Answer: C Topic: Aggregate Supply Skill: Recognition Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking 4) In the macroeconomic  short run, A) actual  real GDP may be less than or more than potential  GDP. B) the unemployment  rate is zero. C)by definition,  the economy  is always moving away from full employment. D) actual  real GDP always equals potential  GDP. Answer: A Topic: Macroeconomic  Long Run and Short Run Skill: Recognition Question history: Modified 10th edition AACSB: Reflective  Thinking Copyright  © 2012 Pearson Education,  Inc.2   Parkin · Macroeconomics , Tenth Edition 5) When  talking about aggregate  supply, it is necessary  to A) focus on the short run. B) focus on the long run. C) distinguish  between long -run aggregate  supply and short -run aggregate  supply. D) distinguish  between long -run full employment  and short -run full-employment. Answer: C Topic: Macroeconomic  Long Run and Short Run Skill: Recognition Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking 6) We distinguish  between the long -run aggregate  supply curve and the short -run aggregate supply curve. In the long run A) technology  is fixed but not in the short run. B) the price level is constant but in the short run it fluctuates. C) the aggregate  supply curve is horizontal  while in the short run it is upward sloping. D) real GDP equals potential  GDP. Answer: D Topic: Macroeconomic  Long Run and Short Run Skill: Recognition Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking 7) In the macroeconomic  long run, A) GDP always is below potential  GDP. B) there is full employment  with no unemployment. C) output  always is above potential  GDP. D) there is full employment  and real GDP is equal to potential  GDP. Answer: D Topic: Macroeconomic  Long Run and Short Run Skill: Recognition Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking 8) In the macroeconomic  long run, A) real GDP equals potential  GDP. B) the economy  is at full employment. C) regardless  of the price level, the economy  is producing  at potential  GDP. D) All of the above are correct. Answer: D Topic: Macroeconomic  Long Run and Short Run Skill: Recognition Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking Copyright  © 2012 Pearson Education,  Inc.Chapter 10   Aggregate  Supply and Aggregate  Demand    3 9) In the long -run A) the aggregate  supply curve is upward sloping. B) real GDP is equal to potential  GDP. C) aggregate  supply depends  on the price level. D) All of the above answers are correct. Answer: B Topic: Macroeconomic  Long Run and Short Run Skill: Recognition Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking 10) The long -run aggregate  supply (LAS) curve A) has a positive slope. B) has a negative  slope. C) is vertical. D) is horizontal. Answer: C Topic: Long -Run Aggregate  Supply Skill: Recognition Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking 11) When  the labor market is int full employment, A) real GDP equals potential  GDP. B) the price level is stable. C) the price level equals potential  prices. D) the SAS curve is horizontal. Answer: A Topic: Long -Run Aggregate  Supply Skill: Recognition Question history: Modified 10th edition AACSB: Reflective  Thinking 12) The long -run aggregate  supply curve is vertical because A) at full employment  prices are stable. B) there is no cyclical inflation. C) potential  GDP is independent  of the price level. D) the money wage rate increases  faster than the price level. Answer: C Topic: Long -Run Aggregate  Supply Skill: Recognition Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking Copyright  © 2012 Pearson Education,  Inc.4   Parkin · Macroeconomics , Tenth Edition 13) The long -run aggregate  supply curve is A) horizontal  at the full employment  price level. B) vertical  at the full employment  level of real GDP. C) upward  sloping because of the effects of price level changes on real GDP. D) the same as the short -run aggregate  supply curve. Answer: B Topic: Long -Run Aggregate  Supply Skill: Recognition Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking 14) Which  of the following  statements  is TRUE? A) The long -run aggregate  supply curve is upward sloping. B) The long -run aggregate  demand curve is upward sloping. C) The short -run aggregate  supply curve is vertical. D) The long -run aggregate  supply curve is vertical. Answer: D Topic: Long -Run Aggregate  Supply Skill: Recognition Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking 15) The long -run aggregate  supply curve is ________  because along it, as prices rise, the money wage rate ________. A) vertical;  falls B) vertical;  rises C) upward  sloping; falls D) upward  sloping; stays constant Answer: B Topic: Long -Run Aggregate  Supply Skill: Recognition Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking 16) The long -run aggregate  supply curve illustrates  the A) relationship  of the price level and real GDP when the economy  is at full employment. B) relationship  of aggregate  supply and aggregate  demand. C) amount  of products  producers  offer at various prices when money wages and other resource  prices do not change. D) surpluses,  shortages  and equilibrium  level of GDP. Answer: A Topic: Long -Run Aggregate  Supply Skill: Recognition Question history: Modified 10th edition AACSB: Reflective  Thinking Copyright  © 2012 Pearson Education,  Inc.Chapter 10   Aggregate  Supply and Aggregate  Demand    5 17) The long -run aggregate  supply curve is the relationship  between the quantity of real GDP supplied  and ________  when ________. A) the price level; real GDP equals potential  GDP B) real GDP demanded;  the wage rate is constant C) the price level; real GDP equals nominal GDP D) real GDP demanded;  the price level does not change Answer: A Topic: Long -Run Aggregate  Supply Skill: Recognition Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking 18) When  the price level rises, the long -run aggregate  supply curve ________. A) shifts  rightward B) does not shift C) slopes  upward D) shifts  leftward Answer: B Topic: Long -Run Aggregate  Supply Curve Skill: Conceptual Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking 19) For movements  along the long -run aggregate  supply curve, A) potential  GDP is dependent  on the price level. B) the prices of goods and services change while the prices of productive  resources  hold steady. C) the price level and the money wage rate change by the same percentage. D) All of the above are correct. Answer: C Topic: Long -Run Aggregate  Supply Skill: Conceptual Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking 20) The long -run aggregate  supply curve shows the A) maximum  GDP the nation will ever produce. B) full -employment  level of real GDP. C) level of real GDP associated  with a constant price level. D) level of output at which real GDP equals nominal GDP. Answer: B Topic: Long -Run Aggregate  Supply Skill: Conceptual Question history: Modified 10th edition AACSB: Reflective  Thinking Copyright  © 2012 Pearson Education,  Inc.6   Parkin · Macroeconomics , Tenth Edition 21) Which  of the following  is true about the long -run aggregate  supply curve? A) It is vertical at the level of potential  GDP. B) It shows the relationship  between the price level and real GDP when the economy  is at full employment. C) It does not shift in response  to temporary  changes in aggregate  demand. D) All of the above are true. Answer: D Topic: Long -Run Aggregate  Supply Skill: Conceptual Question history: Modified 10th edition AACSB: Reflective  Thinking 22) Which  of the following  events will increase long -run aggregate  supply? A) an increase in the interest rate B) an increase in resource  prices C) a decrease  in expected  profit D) an advance in technology Answer: D Topic: Long -Run Aggregate  Supply Skill: Recognition Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking Copyright  © 2012 Pearson Education,  Inc.Chapter 10   Aggregate  Supply and Aggregate  Demand    7 23) The curve labeled A in the above figure is a A) short -run aggregate  demand curve. B) short -run aggregate  supply curve. C) long -run aggregate  demand curve. D) long -run aggregate  supply curve. Answer: D Topic: Long -Run Aggregate  Supply Skill: Analytical Question history: Previous  edition, Chapter 10 AACSB: Analytical Skills 24) The curve labeled A in the above figure will shift rightward  when A) the price level falls. B) technology  increases. C) population  falls. D) the price level rises. Answer: B Topic: Changes  in Aggregate  Supply, Technology Skill: Analytical Question history: Previous  edition, Chapter 10 AACSB: Analytical Skills Copyright  © 2012 Pearson Education,  Inc.8   Parkin · Macroeconomics , Tenth Edition 25) The short -run aggregate  supply curve A) shows  what each producer  is willing and able to produce at each level of income holding constant potential  GDP and all resource  prices. B) shows  the relationship  between aggregate  production  and the price level holding constant potential  GDP and all resource  prices. C)becomes vertical if there is excess production  capacity within the economy. D) shows  a negative  relationship  between the price level and real national income holding constant potential  GDP and all resource  prices. Answer: B Topic: Short -Run Aggregate  Supply Skill: Recognition Question history: Modified 10th edition AACSB: Reflective  Thinking 26) The short -run aggregate  supply curve A) is vertical. B) has a negative  slope. C) has a positive slope. D) is horizontal. Answer: C Topic: Short -Run Aggregate  Supply Skill: Recognition Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking 27) The short -run aggregate  supply curve is upward sloping because in the short run the A) money  wage rate changes but the price level does not. B) price level changes but the money wage rate does not. C)both the money wage rate and the price level change. D) neither  the money wage rate nor the price level can change. Answer: B Topic: Short -Run Aggregate  Supply Skill: Recognition Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking 28) The positive relationship  between short -run aggregate  supply and the price level indicates  that, in the short run, A) firms produce more output as the price level falls. B) firms produce more output as the price level rises. C) the money wage rate increases  when moving along the short -run aggregate  supply curve. D) lower  price levels are more profitable  for firms. Answer: B Topic: Short -Run Aggregate  Supply Skill: Recognition Question history: Previous  edition, Chapter 10 AACSB: Reflective  Thinking Copyright  © 2012 Pearson Education,  Inc.